At some point, you may have the option to accept your paycheck in the form of cryptocurrency, rather than the traditional U.S. official currency you’re used to. You may request this of your employer or your employer may request to pay you this way. Either way, is this a legitimate transaction or does it qualify as an unpaid wage, prompting you to seek out an unpaid wages lawyer? Is it something you should move forward with?
It’s a complex issue, and one that can’t be answered concisely. Let’s explore.
Why would an employer pay an employee or independent contractor in crypto? And why would the employee or independent contractor want it?
There are several advantages. Cryptocurrency is completely decentralized, meaning it’s not affiliated with the United States government, nor is it controlled by a central bank. Depending on the cryptocurrency you choose, your crypto transactions will likely be completely secure and anonymized – which you can’t say about traditional monetary transactions. These transactions are also irreversible and tend to be associated with lower fees.
There’s also some novelty to being paid in crypto. Speculators may want to be paid in crypto because they want to see the value of their hours worked and their money increase over time. Tech enthusiasts may simply like the idea of being paid digital currency.
Important Considerations Before Accepting Paychecks in Crypto
Before accepting a paycheck in crypto, there are some things to keep in mind:
- It’s technically legal (in most places) to be paid in crypto. According to the Fair Labor Standards Act (“FLSA”), “payments of the prescribed wages, including [minimum wage and] overtime compensation, in cash or negotiable instruments payable at par.” The wording of this law is somewhat ambiguous, but cryptocurrency can be considered to be a payment “at par” with cash. The caveat here is that you still must be paid an amount equal to or higher than minimum wage. In most areas, there are no specifications that workers must be paid in U.S. dollars, though there are provisions that workers can’t be paid in certain other ways. For example, in California, in addition to the provisions in the FLSA, it’s illegal to pay employees in “script, coupon, cards, or other thing redeemable, in merchandise or purporting to be payable or redeemable otherwise than in money,” which applies to coupons more than cryptocurrency.
- If your employer is forcing you to be paid in crypto, you may be able to take action. If your employer is trying to force you to accept crypto payments, you may be able to push back. Negotiate to be paid in U.S. currency. If they refuse, and continue paying you in crypto (or if they aren’t paying you at all), you may be able to file an unpaid wages lawsuit through an employment law attorney. According to Eric A. Panitz of Wrongful Termination Law Group, “there are many conditions that qualify as unpaid wages. If your employer is withholding money, if they fail to document the payments, if they don’t pay you after termination, or if they’re not calculating your wages properly, it’s important to take legal action and get what you’re owed.” Talk to a lawyer for more information.
- Your employer may be unwilling to pay you in crypto. On the other side of the equation, your employer may be unwilling to pay you in crypto, even if you request it. They may be unfamiliar with how cryptocurrency works or may prefer something more easily traceable for standard pay and overtime pay.
- Crypto tends to be volatile. We’ve all heard stories of people who became overnight millionaires because of their crypto investments. But the truth is, crypto is volatile – and it can sink in price, just as it can rise. If you aren’t careful, it could compromise your financial earnings. Thousands of people have lost small fortunes because they happened to time the market wrong; don’t let yourself be one of them.
- Some cryptocurrencies are more reliable than others. Not all cryptocurrencies are the same. Bitcoin is arguably the most popular and most stable coin in circulation; because of this, it’s also one of the most widely accepted. New coins tend to be more volatile and less dependable – there’s also a chance that new coins you encounter are designed as a scam. If your employer offers to pay you in a cryptocurrency you’ve never heard of before, make it a point to do some research before accepting it.
- Crypto isn’t always accepted. Most people work so they can pay for rent, groceries, and other things they need. But if you’re paid exclusively in crypto, you may not be able to purchase everything you want; crypto isn’t universally accepted. Thankfully, this is changing quickly. More stores and individuals are accepting crypto as a form of payment due to increased demand. But you can’t count on it everywhere.
- You can negotiate for a hybrid approach. If you’re torn between getting paid in traditional U.S. currency and crypto, you may be able to negotiate for a hybrid approach. In this way, you can get paid a portion of your earnings in crypto, with the rest in cash. It’s a great compromise if you love cryptocurrency and believe in its future, but you still want to be grounded with conventional money.
- You still have to pay taxes. Even though crypto transactions are secure and private, you still have to pay taxes on what you earn, including both standard pay and overtime pay. Don’t think you can dodge the tax implications of income by getting paid in crypto.
Ultimately, whether or not you’re paid in crypto is up to you. If you like the idea of being paid cryptocurrency, and you want all the advantages, you can elect to be paid in crypto or a hybrid of crypto and cash. If your employer is trying to impose crypto payments on you and you don’t want to accept them, don’t be afraid to push back and contact an unpaid wages lawyer.